More tea leaves...

A caption in my last post pointed out that John F. Kennedy viewed reading The New York Times as perhaps more enlightening than poring over government intelligence reports.

I am not privy to CIA or other such "intel," but from where I sit so-called "newspapers of record" remain a great source of both hard news and especially news analysis. And in this digital age, you may not even have to fork over a buck or more to read these publications as many, including The Times, make their entire content available free of charge online.

Case in point: A piece by Larry Rohter in the edition for August 3rd, "Shipping Costs Start to Crimp Globalization," explains how the massive spike in fuel costs is already leading some global manufacturers to rethink their supply chains including where they manufacture their goods in the first place.

"Many economists argue that globalization will not shift into reverse even if oil prices continue their rising trend," Rohter writes. "But many see evidence that companies looking to keep prices low will have to move some production closer to consumers. Globe-spanning supply chains -- Brazilian iron ore turned into Chinese steel used to make washing machines shipped to Long Beach, Calif., and then trucked to appliance stores in Chicago -- make less sense today than they did a few years ago. "

Supporting his argument, Rohter points out that the Swedish-based global home-furnishings giant Ikea opened its first U.S. factory in May and some electronics firms that departed Mexico for the lower wages paid in China are now coming back to our southern neighbor "because they can lower costs by trucking their output overland to American consumers. "

"Made in China" labels may become less ubiquitous due to global fuel costs.

Ah, yes, that word: trucking! Rohter observes that the industries most likely to be affected by the upturn in transportation costs are those producing heavy or bulky goods that are expensive to ship relative to their sale price.

As an example, he states that China‘s steel exports to the U.S. "are now tumbling by more than 20% on a year-over-year basis, their worst performance in a decade, while American steel production has been rising after years of decline." He says that "motors and machinery of all types, car parts, industrial presses, refrigerators, television sets and other home appliances could also be affected." And he adds that "industries that require relatively less investment in infrastructure, like furniture, footwear and toys, are already showing signs of mobility as shipping costs rise."

You don't even have to read between those lines to see opportunity knocking for truck fleets to haul the inbound and outbound freight these manufacturing plants of all type will generate, right here at home.